THE Cabinet committee on economic affairs on Thursday gave its approval for investment for PSUs to invest up to 30% of the funds in the equity mutual funds to maximise returns on surplus funds of public sector enterprises. This could see a flow of more than Rs 60,000 crore in the buoyant capital market. Blue-chip companies such as ONGC, IOC, Bhel and SAIL, sitting on huge cash reserves of over Rs 2,50,000 crore, can now ride the booming equities market. The Cabinet has also decided that a white paper on disinvestment will soon be tabled in the Parliament. The government has made it clear that it will not support strategic sale but the white paper will only furnish a chronology of developments since 1999. A decision to this effect was taken by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Manmohan Singh, but with a caveat that these funds would be channelised only through funds managed by public sector financial institutions. The board of PSEs would decide the guidelines, procedures and management control systems for investment in MFs in consultation with their administrative ministries. “The approval would provide Navratna and Mini Ratna PSEs with a level playing field with private sector entities who can invest in MFs and provide flexibility to choose schemes based on relative performance of the MFs,” Priyaranjan Dasmunsi, minister for information and broadcasting, told reporters at a briefing after the Cabinet meeting. Profitable public sector undertakings generate huge cash surplus every year. However, they can park this surplus only in limited avenues like fixed deposits of state owned banks or government securities. While SAIL has about Rs 6000 crore, Bhel has Rs 4000 crore of cash pile. Even a small percentage of the total cash reserves available with any of these companies would increase flow of funds into the mutual funds market. Since public sector undertakings despite being listed stock exchanges have stayed away from investing in equities so far due to the risks involved, it may take some time for them to go for equity mutual funds initially.